New Rule Improves ACO Incentives and Rewards for Participating in the MSSP

Dean Stephens
June 13, 2016

A new final rule that will change the way Medicare reimburses Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) provides stronger incentives for ACOs to participate in the program and better rewards providers for continuing to improve patient care and coordination. The Centers for Medicare & Medicaid Services (CMS) touted the improvements as the next step in its “strategy to improve the health care system by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.”

Here are the highlights:

Improved Payment Methodology

CMS will modify its methodology for resetting benchmarks and calculating reimbursements to take into account the ACO’s ability to deliver high-quality care at a lower cost relative to other providers in the same region, rather than using national trend data, and they will no longer make evaluations based solely on past performance. In making the shift, CMS recognized that the cost of health care fluctuates from community to community and across the country, and the agency believes the change will provide more incentives for ACOs to participate in the shared savings program by giving them more opportunities to be successful.

The rule will be implemented using a phased-in approach beginning in 2017 to ensure all ACOs that are currently in the program are prepared for the revised methodology.

Data Sharing

To support transparency, provide ACOs with a way to model impacts, and give the public a better understanding of an ACOs population, the CMS in its fact sheet stated it will release annual reports containing county-level expenditure and risk score data.

New Participation Option

The rule establishes a new participation option to help ACOs to transition into the more advanced performance-based risk tracks of the program. Currently, ACOs can choose to participate in the MSSP under a one-sided shared payment model (Track One) or a more advanced, two-sided shared savings / shared losses model (Track Two or Track Three). Once their initial agreement period ends, an ACO that participated under the one-sided model can apply to continue under that model for a second three-year period or apply to the two-sided model.

There will now be an additional option that allows ACOs that are accepted into the two-sided model for their second agreement period to request a deferment and continue under Track One for an additional year. When this fourth performance year is up, the ACO will move into the selected advanced track. The idea is to give the ACO more time to prepare to take on the additional financial risk, making for a smoother transition and, CMS believes, an increased chance at success.

The new participation option comes just after the National Association of ACOs (NAACOS) released a white papercritical of the current CMS risk models. “As a result of losses and other program challenges, two-sided ACO programs have seen high dropout rates,” say the paper’s authors. They continue, “The Pioneer program is the best example of this, beginning in 2012 with 32 participants and only 9 remaining participants in 2016. MSSP Track 2 ACOs also saw a 50 percent dropout rate between 2011 and 2015.”  The paper argues that the financial burden that must be assumed by organizations that want to take on more risk in the advance tracks is for many – particularly smaller, independent medical groups – impractical or unfeasible.

However, the survey on which NAACOS based its white paper found that while a significant number of ACOs are not currently prepared to take on more risk, the majority (44 percent) of those who responded felt they would be ready in one to three years. This could potentially be seen as a bright spot for CMS, which believes that the long term the long-term success of the Shared Savings Program rests on successfully transitioning it to a two-sided performance-based risk program, and bolsters their decision to facilitate ACO transition to an advanced track by allowing it to continue in Track One for a fourth program year.

The MSSP currently serves over 7.7 million Medicare beneficiaries in more than 430 Accountable Care Organizations in every state plus the District of Columbia. While data shows mixed results from the initial, 2014 plan year – with ACOs saving $411 million dollars but only about a quarter of them receiving shared savings payments – the new program improvements will, says CMS Acting Administrator Andy Slavitt, “build on that progress, so that more patients benefit from coordinated care and Medicare pays for what works to help doctors, nurses, and other clinicians focus on the quality of care, not the quantity of services.”

The new rule seems to be a step in the right direction that has the potential to further strengthen and accelerate the shift toward value-based care that delivers better quality care at a lower cost to Medicare patients and, ultimately, all Americans.

Dean Stephens is the CEO of Talix.
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